Helping business navigate the trading law environment

Tag: uK economy

In previous blog entries, I have discussed at length the modern definition of marketing. However, I still feel that many SME’s still don’t get it. They still see marketing as a subsidiary of sales or as only the management of promotional activity. Worse, I still see many advertisements for marketing jobs which expect marketing professionals to be experts in graphic design or website management.

I decided to look at a few university websites to see the course content of their marketing courses. What I saw on the university sites were course syllabuses containing marketing theory and management practice. Not one course included modules or subject streams on graphic design or web management.

The conclusion is simple, if you need a professional graphic designer, advertise for a graphic designer. If you need a website technician, advertise for a website technician. Do not expect a marketing graduate to have such professional expertise.

Another common feature of marketing job advertisements is the prominence of social media management.

Now, social media is no doubt an important part of a firm’s promotional mix. However, it seems that many businesses view it as a cheap option for their promotional activity.

social media is not a cheap option. It is a promotional channel like any other and requires a similar amount of effort and resources. In fact it could require additional resources to provide the same outcomes as other, more traditional marketing channels.

The jury is still out on the effectiveness of social media as a sales channel. Some firms may feel they are getting good results but there has been little research done to measure social media’s effectiveness as a sales channel. What marketers do know is that social media can help your website become ‘sticky’. It can help as a signpost to your website, it can generate electronic word of mouth and it is a useful tool for developing brand advocates. However, there is little evidence to show that it is a more effective channel than traditional promotional strategies.

One thing marketing is not is the generation of propaganda. This week, the UK Conservative Party released three promotional messages. One relating to the extension of the plastic bag levy to small shops; a second regarding the banning of charges for consumer credit; and a third relating to manufacturing output.

The first two messages passed off the policies as Conservative Party policy. In truth they were the implementation of EU directives.

The third message stated, in a congratulatory manner that UK manufacturing output had passed 2008 levels.

For me this message caused significant cognitive dissonance. In the normal run of things, UK manufacturing output in 2018 should be far higher than in 2008. New technology alone should have meant an increase in manufacturing output compared to 2008. There are indications that rather than investing in new equipment and additional capacity, UK firms are holding cash at bank: building a safety net to see them through post-Brexit turbulence. What the message actually indicated was that UK manufacturing had suffered a lost decade.

The Conservative message also took the manufacturing figures in isolation. When you look at the UK economy in a wider perspective, there are still some worrying statistics.

The UK construction industry is effectively in recession and last year saw a 3.6% reduction in output. Carillion, the UK’s largest civil engineering and public service outsourcing firm is in serious financial trouble. There are rumours that it may enter administration tomorrow if a deal cannot be agreed with its pension fund and creditors.

Many UK retailers have reported poor trading figures over the Christmas period. House of Fraser, for example, is talking to its landlords about reducing store rents. Other firms such as Argos have struggled in what should be their strongest sales period.

Consumer debt is also rising. Household debt has now passed pre-credit crunch levels and the Bank of England has told banks to tighten lending requirements. Inflation is increasing whilst wages are stagnating.

UK exports have risen since the EU referendum predominantly due to the fall in the value of the pound. However, the cost of raw materials has risen dramatically. At one point factory gate inflation was running at 18% where commodities were traded in US dollars. Part of the reason CPI is rising is that many manufacturers are having to pass that factory gate inflation on to domestic UK consumers.

The UK government has been careful to prioritise statistics relating to the volume of exports not the level of earnings from those exports. I strongly suspect that UK firms may be selling more abroad but that their earnings from those exports has not grown.

it will be interesting to see if the modest rise in the pounds value in recent weeks impacts export growth as British goods become more expensive abroad.

Many Brexit supporters point to the rise in the pound and the value of stock exchanges as signs that the impact of leaving the EU are being overstated. However, there are other reasons that have caused these effects.

The first is that the US bond market is currently a bear market. Investors are switching their strategy from government bonds to shares. The second reason is that the dollar is lower than it should be and the cause of that is Donald Trump.

Trump has two major economic policies, the lowering of tax rates and vastly increased infrastructure spending. These two policies conflict with one another.

Much of America’s infrastructure is in dire need of renovation or replacement. For example, nearly all of America’s dams are long past their expected life span. To increase infrastructure spending trump needs additional federal income. Big tax cuts are not going to provide that additional income. Trump will have to significantly increase the level of US government borrowing to carry out his proposed infrastructure projects.

Higher government borrowing means lower bond yields and as a result constrains the value of the dollar. Hence the bull market in shares. There is a real risk that stock market levels are a bubble; and bubbles burst. There is a real risk the bull may become a bear.

So, given the above factors, the promotional messages from the Conservative Party are political propaganda not marketing messages.

So if marketing is not the dissemination of ‘propaganda’, what is it?

Marketing is not advertising, it is not web or graphic design. Marketing is the development of a consumer focus throughout all aspects of your business from product design to after-sales service.

In previous entries, I have shown how, over the last century, manufacturing has moved from a product focus, to a sales focus, to a consumer focus. How business went from concentrating on manufacturing as many goods as possible; to a prominence on selling as many goods as possible; to a modern focus on satisfying the needs and desires of target customer groups. Modern marketing is the last of these. It is not a subset of sales or advertising; it is the development of corporate strategies and should be at the centre of your corporate planning.

Some academics have complained that putting marketing at the centre of business planning is little more than an ideology; that marketing constrains innovation and that it leads to dullness. I suspect that such views come from studies of firms that aren’t doing it right.

Surely the aim of any business is to maximise income and to survive in the longer term. If you are producing goods and services that people don’t want, neither of those goals will be achieved. By putting the expectations of your consumers at the centre of your planning, you are more likely to meet those goals.

Look at the number of proposals on Dragon’s Den that are rejected because the entrepreneur has not considered the expectations of prospective customers? How many are told the dragons will not invest as they see no market for the product.

Those stating that marketing is a source of dullness infer that the use of market research in planning leads to copycat products and dull marketing campaigns. But that is marketing done badly. Good marketing is looking for difference; not copying your competitors and attacking head on but finding strategic gaps and exploiting them.

Done properly, marketing should torment and tantalise the intended target segment and as a result create insatiable desire.

In response to those advocating consumer focus as producing dullness, the concept of retro marketing was developed. This concentrates on four elements:

Tricksterisation: Use panache and audacity e.g. Britvic used advertisements which looked like public information films. Then a big orange man jumped out and slapped the subject of the film with the tag line, “You’ve been tangoed”.

Using such tactics, the motivation to use ‘Me Too’, copycat promotional strategies can be avoided. That is true marketing.